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01.28.2013  
 

Don't Ask, Don't Tell in Napa

Winery expansion plans unsettle grower-winery relations

 
by Paul Franson
 
 
stony hill cabernet
 
Two proposals to increase wine production in Napa County have caused some to review the 1990 Winery Definition Ordinance. Credit: Jason Tinacci / Napa Valley Vintners.
Napa, Calif.—A whirlpool in a wineglass that would likely affect only a few wineries in Napa County has unsettled the cooperation between growers and wineries that has long been a major strength of the county’s wine business.

Tighter enforcement of existing rules and applications to substantially increase wine production at two wineries have inspired a new look at a long-dormant aspect of the county’s 1990 Winery Definition Ordinance.

Among many other provisions such as outlawing weddings and corporate meetings at wineries, the ordinance allowed the approximately 250 existing wineries at the time to continue sourcing grapes from outside the county to make wine.

New wineries in areas zoned for agriculture had to get at least 75% of their grapes from within the county. In any case, a wine has to be made from 85% Napa County grapes to use a Napa Valley American Viticultural Appellation designation on its label.

The "75% Rule" was likely critical in passing the ordinance, which all groups agree has greatly benefitted Napa’s wine business. It has also helped to keep Napa Valley largely agricultural instead of becoming another swarm of housing developments and strip malls.

However, the wine production Napa County allows for area wineries approaches the total grape supply in some years, prompting Andy Beckstoffer, a powerful local grower, to say, “We’re running out of grapes....The issue has to be joined.”

Napa grapes are also more expensive than those from outside the county, and Beckstoffer has been a leader in pushing for higher prices.

The issue arose, said Jon Ruel, president of the Napa Valley Grapegrowers and vice president of operations at Trefethen Vineyards, when the county started looking harder at the 75% rule while doing yearly audits of wineries. “We felt that if they were going to step up enforcement, we should chime in more,” Ruel commented.

What triggered the discussion was the application last March for Reata Winery in south Napa to increase production from 200,000 gallons to 1.1 million gallons, and to bottle 2.4 million gallons of bulk wine. The county allowed it to crush 800,000 gallons and bottle 350,000 gallons of bulk wine.

Then in June, Raymond Vineyards in Rutherford sought to double production from 750,000 gallons to 1.5 million gallons. County planning staff recommended approval if Raymond could prove it had a Napa grape source. Raymond has since withdrawn that application but may resubmit it.

This concern about having sufficient Napa grapes led to discussion of grandfathered wineries, and as it has often done, on July 9 the county gathered a committee of four interested industry parties (the Napa Valley Vintners, Napa Valley Grapegrowers, Napa Farm Bureau and Winegrowers of Napa County, a lobbying group for large local wineries) to come up with a compromise.

The groups tentatively agreed at that time and also agreed to consult with their members and develop a consolidated position if possible.  Since then, there has been disagreement on one point related to grandfathered wineries which wish to expand. 

The Vintners’ position is that grandfathered wineries were part of the agreement reached 23 years ago, and some wineries may “move” Napa grapes from their grandfathered allotment into expansion under the law.

Many other privileges of older wineries aren’t allowed to new ones, either, like public tastings and tours, and even, in the case of a few, weddings and public food service.

There has been no suggestion to change these grandfathered privileges, and everyone agrees that wineries seeking expansion that would remove vineyard acreage from the Agricultural Preserve—land protected by zoning rules since 1968—would have to meet the 75% rule in any case.

In December, the Napa Valley Vintners sent a letter signed by elected president Rick Jones to the planning commission, basically agreeing with the way the county has been interpreting the law:

“The Napa Valley Vintners…believes that the county has been properly interpreting the 75% rule since its inception, including their application with regard to the recent audits of compliance in this area.

“Over the past 23 years there have been a number of applications for expansions by pre-WDO grandfathered wineries, and the county has responded to these in a consistent and appropriate way. This has continued to today. The NVV sees no reason to change the approach with respect to both applications and audits of compliance.

“Further, and specifically in regard to the county’s request, we believe they are properly interpreting that most of the incorporated areas of the county and all of the airport industrial park, are not subject to the 75% rule.”

The letter concluded:

“Also, it is likely that the 75% rule would never have been agreed to in the first place had not the grandfathered wineries had the rights ascribed to them. To change their rights after 23 years of application is not fair and would be subject to serious legal challenge.”

On Jan. 17, the Grapegrowers and Farm Bureau sent a letter to the county disagreeing about the use of “grandfathered” grapes when a pre-WDO winery wishes to expand.

Then, in a letter to its members Jan. 23, the Vintners said, “Interestingly, all the local trade groups vocalized initial support for the county’s application of the 75% rule at that meeting.”

The Vintners’ letter continued, “After this meeting, the county requested formal industry input on the application of the 75% rule, as well as whether the 75% rule should be applied to the airport industrial area. It currently is not.

“The organizations were unanimous in believing that the 75% rule should not be applied to the airport industrial area, but, unfortunately, the Grapegrowers and Farm Bureau switched their positions, wanting to have tighter regulation on the 75% rule’s application to ‘grandfathered’ wineries, clawing back the rights provided in those wineries’ county use permits.”

Rex Stults, the Vintners’ government relations director, fears that this could open discussions leading to more challenges to the hard-fought definition, a concern echoed by others.

Stults also brings up the practical issue: How could they enforce this? The grape sources of wineries grandfathered in are specifically not disclosed, so how could one find out if there is change?

“This is a solution in search of a problem,” said Stults. “The ordinance has worked fine for 23 years. Why try to change it now?”

Beckstoffer, a grower and neighbor of Raymond Vineyards, acknowledges that he had a hand in initiating the recent discussion of the issue.

Beckstoffer said that he believes that it was the intent of the law that expansion use new grapes, and he suspects that most wineries that have expanded followed that rule.

He’s concerned that some newcomers to the valley may regard this as strictly a financial issue. “They’re not concerned about the Agricultural Preserve,” he claimed, adding, “Do we want the kind of valley that just focuses on crushing everything it can? Is that the valley we want? It affects everyone.”

In fact, Beckstoffer believes that most members of the Napa Valley Vintners—a large majority of whom are small, family-owned wineries—would agree with him.

Beckstoffer admits that the original WDO ordinance was a contentious issue, but he said, “It was worth the effort. This is also an extremely important issue, too, and it’s also worth the effort to succeed.”

By contrast, Grapegrowers’ president Ruel feels that the whole issue is not really a big deal. “This is just an annoying detail. We’re not trying to change the WDO. The rhetoric has gotten a little heated, but the sky isn’t falling. We all agreed on all the big issues long ago.”

Ruel believes that the issue arose because the ordinance protected grandfathered wineries but treated expansion like a new winery. “That created an inherent conflict. How can a winery be both?”

He assured people, however, “Whatever way this goes, it won’t change the total of Napa grapes crushed.”

Ruel also emphasized that it’s not big vs. small wineries or growers vs. vintners—many growers and wineries are members of both Vintners and Grapegrowers. “It’s between those who use only Napa grapes and those who crush those from outside the county.” He added that he thinks there’s a place for both.

More to the point, the tempest may soon be stilled. Ruel said that he expects the issue to be resolved shortly. “If you were writing this in a week, the story might be very different—or no story at all.”

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